Markets & Morality from a Biblical Perspective, Part Three

Yesterday we looked at biblical principles found in the Four-Chapter Gospel — principles that impact how we approach economics. A failure to understand this connection is one reason Christians do not see any relationship between biblical and economic principles.

As I suggested yesterday, there is another reason Christians do not make the connection between markets and morality.

The second reason that Christians mistakenly believe free markets must be immoral and at odds with Christian values is that they do not really understand free markets. Free enterprise is an economic system whereby wealth and the means for creating wealth are privately-controlled and owned. Adam Smith referred to it as a system of natural liberty.

Free enterprise does not occur from top-down design, but rather it is an informal system that emerges from human exchange fueled by self-interest. It is ongoing trade in which an individual or individuals are free to create and operate businesses for profit with minimal governmental interference.

In free market economies, the government provides an institutional setting for the free exchange among market participants by upholding the rule of law which protects the right to own and transfer property.

In 1776, Adam Smith was one of the first authors to specifically write about free enterprise with the publication of his book An Inquiry Into the Nature and Causes of the Wealth of Nations. He argued that the wealth of nations could be increased by allowing the individual to seek his own self-interest, and by removing governmental control over the economy. He reasoned that this theory rested on three major principles:

1. People are motivated by self-interest.

Based upon his observation of human nature, Smith concluded that people are motivated by self-interest. He wrote,

It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.

Smith went on to say that “neither intends to promote the public interest,” yet each is “led by an invisible hand to promote an end that was not part of [his] intention.” Free markets, then, help mitigate greed by encouraging us to serve others as part of our broader self-interest.

2. Property rights are important.

Adam Smith recognized the importance of private property. Property should not be held in common, but owned and freely traded in a free market system. Profits generated from the use and exchange of private property rights provide the mechanism that drives economic growth.

3. Limited government is essential.

Adam Smith believed that for free markets to work, it was necessary to minimize the role of government. He argued that we should decrease the role of government and increase the role of the free market.

Bringing clarity to this misunderstanding about the definition of markets is an important step in answering questions about markets and morality.

I’d like to end with a brief biblical definition of markets offered by Dr. Anne Bradley in a previous post:

…free enterprise…It means being free to choose your vocation, being free to understand your calling and pursue it with integrity. This is precisely how we are created – as unique individuals with a purposeful contribution to make. There is inherent morality in free enterprise in that it provides us a greater opportunity to contribute to Christ’s Kingdom, in the here and now. We may not understand how we are making the contribution, but we are. We are serving others through our work.

In my next post I will look at the economic principles found in the story of creation and the Garden of Eden.

Do you agree with this definition of what a market is? How would you explain markets to someone?

“Free enterprise is an economic system whereby wealth and the means for creating wealth are privately-controlled and owned.”TwitterFacebook

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RogerMcKinney

It would be nice if you would include something about the
work of the Salamancan scholars on this. They got their respect for private
property from the Bible: thou shalt not steal or covet. And they determined
that private property can exist only with free markets because property
requires control. If someone else controls your property, then you don’t really
own it. And the biggest in the Middle Ages was a just price, meaning equality
in exchange. Salamancan scholars determined that just prices exist only in free
markets.

Since Jesus believed the Torah was from God, that makes him
a capitalist because capitalist principles came from the Torah.

RogerMcKinney

PS, there is not greater document promoting limited government than the Torah law. Israel under the judges had no legislative or executive branches and no standing army. All Israel had was courts, which handles only the civil law. Religious law was handled by the priests and the courts let individuals and families take care of the moral laws. How many Americans would be happy with such limited government?